CS Chirchir: Oil marketers yet to be paid Sh42 billion for fuel subsidy

When long queues were witnessed in in petrol stations as the biting fuel shortage cut across the country. [File, Standard]

The government is yet to pay oil marketers Sh42 billion for the scrapped fuel subsidy programme.

While appearing before the National Assembly plenary in Nairobi on Wednesday, Energy and Petroleum Cabinet Secretary Davis Chirchir said the funds were yet to be disbursed to the respective oil marketers who are now facing cash crunch.

"The fuel subsidy debt which stood at Sh50 billion now stands at Sh42 billion because last week we made some payments. I do agree that this has stifled some of our small petroleum dealers but we are moving to deal with this," said the CS.

In response to queries from the legislators, Chirchir revealed that the government was now depending on a budgetary allocation by Parliament to clear the pending bills.

"We have a budgetary allocation from this House through the supplementary budget of approximately Sh40 billion which should help us extinguish the outstanding bills to petroleum dealers...Subject to cash flows within government, we should be able to extinguish the outstanding debt," stated the CS.

Kenya commenced its pump price stabilization in 2021 in a deal that saw oil marketers keep prices of super, diesel and kerosene unchanged despite a spike in global prices in a bid to cushion consumers from high fuel prices.

The Treasury however delayed the compensation to oil marketers occasioning severe fuel shortage from March to April 2021.

President William Ruto scrapped the subsidies for petrol and maize flour on September 13 last year and reduced those for diesel and kerosene, saying they were unsustainable.

"On fuel subsidy alone, the taxpayers have spent a total of Sh144 billion, a whopping Sh60 billion in the last four months," he said during his inauguration on September 13 last year.

The Energy Petroleum Regulatory Authority consequently scrapped the subsidy on petrol.

The Treasury saved approximately Sh9.49 billion from the partial withdrawal of fuel subsidies that sent diesel and petrol prices to a historic high. For the first time in a year, the government fully withdrew a Sh20.5 a litre subsidy on petrol and halved the reliefs on kerosene and diesel to Sh26.25 and Sh20.82 respectively.

"If the subsidy continues to the end of the financial year, it will cost the taxpayer Sh280 billion, equivalent to the entire national government development budget," Ruto said

The National Treasury has, however, subsidized diesel and kerosene for several months in a row.